SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
NATURE'S SUNSHINE PRODUCTS, INC,
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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NATURE'S SUNSHINE PRODUCTS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1997
To the Shareholders:
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Nature's Sunshine Products, Inc. (the "Company") will be held at the Company's
corporate offices at 75 East 1700 South, Provo, Utah 84606, on Monday, May 19,
1997, at 10:00 a.m., local time, for the following purposes:
1. To elect two directors, each to serve a term of three years, and
until his or her successor is elected and shall qualify;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 7, 1997 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting of Shareholders, and only shareholders of record
at such date will be so entitled to notice and to vote.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON SHOULD YOU DECIDE TO
ATTEND THE MEETING.
By Order of the Board of Directors
BRENT F. ASHWORTH
SECRETARY
Dated: April 14, 1997
PLEASE FILL IN, DATE, SIGN, AND RETURN THE ENCLOSED PROXY WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. A PROXY IS REVOCABLE AT ANY TIME PRIOR
TO THE VOTING OF THE PROXY, BY WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY OR
BY VOTING IN PERSON AT THE MEETING.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF
NATURE'S SUNSHINE PRODUCTS, INC.
---------------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Nature's Sunshine Products, Inc. ("the
Company") for the Annual Meeting of Shareholders of the Company to be held at
the Company's corporate offices at 75 East 1700 South, Provo, Utah 84106 on May
19, 1997, at 10:00 a.m., local time. The Shareholders of the Company will
consider and vote upon the proposals described herein and referred to in the
Notice of the Meeting accompanying this Proxy Statement.
The close of business on April 14, 1997 has been fixed as the record date
for the determination of the shareholders entitled to notice of, and to vote at,
the Annual Meeting. On such date there were 18,795,887 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled to one
vote on each matter to be considered at the meeting. For a description of the
principal holders of the Company's Common Stock, see "PRINCIPAL HOLDERS OF
COMMON STOCK" below.
Shares represented by Proxies will be voted in accordance with the
specifications made thereon by the shareholders. Any Proxy not specifying the
contrary will be voted in favor of the Board of Directors' nominees for
directors of the Company.
The Proxies being solicited by the Board of Directors may be revoked by any
shareholder giving the Proxy at any time prior to the Annual Meeting by giving
notice of such revocation to the Company, in writing, at the address of the
Company provided below. The Proxy may also be revoked by any shareholder giving
such Proxy who appears in person at the Annual Meeting and advises the Chairman
of the Meeting of his intent to revoke the Proxy.
The principal executive offices of the Company are located at 75 East 1700
South, Provo, Utah 84606. This Proxy Statement and the enclosed Proxy are being
furnished to shareholders on or about April 14, 1997.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth information as of March 31, 1997, with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person who, to the knowledge of the Company, is the beneficial owner of more
than 5% of the Company's outstanding Common Stock, (ii) each director and
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nominee for director, (iii) each of the executive officers named in the Summary
Compensation Table under "Executive Compensation", and all officers and
directors of the Company as a group.
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED(1) CLASS(2)
- -------------------------------------------------------- ------------------ -----------------
Pauline T. Hughes 2,332,914(3) 12.3%
311 East Canal Road
Salem, UT 84653
Kristine F. Hughes 1,869,392(4) 9.8%
Eugene L. Hughes
75 East 1700 South
Provo, UT 84606
Thomas W. Smith 1,622,745(5) 8.6%
323 Railroad Avenue
Greenwich, CT 06830
Thomas N. Tryforos 1,312,245(6) 7.0%
323 Railroad Avenue
Greenwich, CT 06830
Merrill Gappmayer 143,567(7) .8%
1855 South Alta Vista Drive
Orem, UT 84057
Robert H. Daines 4,000(8) 0%
660 TNRB, P. O. Box 23131
Provo, UT 84602-3131
Douglas Faggioli 167,618(9) .9%
Dale G. Lee 183,062(1)(0) 1.0%
All officers and directors as a group (11 persons) 5,139,509(1)(1) 25.8%
- ------------------------
(1) Except as otherwise indicated, all shares are directly owned with voting
and investment power held by the person named. Amounts shown include, where
applicable, shares subject to presently exercisable options.
(2) The percentage includes shown for each beneficial owner is calculated
based upon the outstanding Common Stock, including shares of Common Stock
subject to presently exercisable options held by such beneficial owner which
are deemed to be outstanding.
(3) Includes 1,928,729 shares held by Pauline Hughes in trust for the benefit
of herself and her children, 261,570 shares held by a family limited
partnership and 142,615 shares subject to presently exercisable options.
(4) Includes 16,335 shares held directly, 1,446,959 shares held by Kristine
and Eugene Hughes as trustees for the benefit of themselves and their
children, 88,173 shares allocated to Mr. Hughes' account in a 401(k) Plan
and 317,925 shares subject to presently exercisable options. Does not
include 1,612,801 shares held by their children and grandchildren.
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(5) In an Amendment No. 1 to a Schedule 13D dated November 25, 1996, Thomas
Smith reported that he held sole voting and dispositive power for 310,500
shares and shared voting and dispositive power for 1,312,245 shares with
Thomas N. Tryforos.
(6) In an Amendment No. 1 to a Schedule 13D dated November 8, 1996, Thomas
Tryforos reported that he held sole voting and dispositive power for 6,022
shares and shared voting and dispositive power for 1,312,245 shares with
Thomas W. Smith.
(7) Includes 16,627 shares held directly, 660 shares held by a minor child and
126,280 shares subject to presently exercisable options.
(8) Includes 4,000 shares subject to presently exercisable options.
(9) Includes 27,696 shares held directly, 17,123 shares allocated in a 401(k)
Plan and 122,799 shares subject to presently exercisable options.
(1)(0) Includes 5,085 shares held directly, 34,317 shares allocated in a 401(k)
Plan and 143,660 shares subject to presently exercisable options.
(1)(1) Includes 267,579 shares allocated to officers in the 401(k) Plan and
1,096,680 shares subject to presently exercisable options.
ELECTION OF DIRECTORS
In accordance with the By-Laws of the Company, the Board of Directors has
fixed its number at five members. The incumbent directors were elected for
staggered terms at the last three annual meetings.
Under the Company's Restated Articles of Incorporation, directors are
divided into three classes, each class to consist, as nearly as may be possible,
of one-third of the number of directors then constituting the entire Board of
Directors. Each year one class of directors is elected, each director to serve a
term of three years.
At the Annual Meeting, two directors, Pauline T. Hughes and Merrill
Gappmayer, will stand for election to serve three years and thereafter until
each of their successors are elected and shall qualify.
In the absence of instructions to the contrary, the persons named in the
Proxy will vote the Proxies for the election of the nominees listed below,
unless otherwise specified in the Proxy. The Board of Directors has no reason to
believe that the nominees will be unable to serve, but if either nominee should
become unable to serve, the Proxies will be voted for such other person as the
Board of Directors shall recommend.
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Certain information concerning the two nominees to the Board of Directors,
and directors whose terms will continue after the Annual Meeting is set forth
below.
SERVED AS
DIRECTOR CLASS AND YEAR TERM WILL
NAME OF NOMINEE AGE COMPANY POSITION HELD SINCE EXPIRE
- ----------------------- --- --------------------------------------- ----------- ------------------------------
NOMINEES
Merrill Gappmayer 55 Director 1980 Class I 2000 (if re-elected)
Pauline T. Hughes 55 Director 1988 Class I 2000 (if re-elected)
DIRECTORS WHOSE TERMS ARE CONTINUING
Kristine F. Hughes 58 Chairperson of the Board and Director 1980 Class III 1999
RobertH. Daines 62 Director 1996 Class II 1998
Eugene L. Hughes 66 Senior Vice President and Director 1980 Class II 1998
COMPENSATION OF DIRECTORS
Board members who are also employees of the Company do not receive any
directors fees. The Company pays its non-employee Board members directors' fees
ranging from $40,500 to $44,500 per year, as well as the cost of health and life
insurance coverage. The Company does not pay any fees for attendance at
committee meetings. Under the 1993 Stock Option Plan, as amended, each
non-employee director of the Company elected by the shareholders received an
annual option to purchase 33,000 shares of the Company's Common Stock at an
exercise price equal to the fair market value on the date of grant. The Plan
expired in December 1996.
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
There were thirteen meetings of the Board of Directors held during the last
fiscal year. All of the directors attended at least 75 percent of the meetings
of the Board and committees of the Board on which they served.
The Board of Directors has a Compensation Committee which consists of
Merrill Gappmayer, Pauline T. Hughes and Robert H. Daines. The Compensation
Committee recommends to the Board of Directors the compensation to be paid to
the Company's officers and other key employees. There were three meetings of the
Compensation Committee during the last fiscal year.
The Board of Directors also has an Audit Committee which consists of Merrill
Gappmayer, Pauline T. Hughes and Robert H. Daines. The function of the Audit
Committee is generally to approve the engagement of the Company's independent
public accountants and to review audit and non-audit services provided by such
accountants. There were two meetings of the Audit Committee during the last
fiscal year.
The Board of Directors has also established a Nominating Committee
consisting of Pauline T. Hughes, Merrill Gappmayer and Robert H. Daines. The
Nominating Committee considers and recommends nominations for election to the
full Board of Directors. The Nominating Committee will consider
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recommendations of shareholders, and recommendations should be submitted to the
Nominating Committee c/o the Secretary of the Company in accordance with the
time period in "Shareholder Proposals" below. There were five meetings of the
Nominating Committee during the last fiscal year.
OFFICERS AND DIRECTORS
The officers and directors of the Company are:
NAME POSITION AGE
- ----------------------------- --------------------------------------------------------- ---
Kristine F. Hughes President, Chief Executive Officer, Chairperson of the 58
Board and Director
Eugene L. Hughes Senior Vice President and Director 66
Merrill Gappmayer Director 55
Pauline T. Hughes Director 55
Robert H. Daines Director 62
Douglas Faggioli Vice President-Finance, Chief Financial Officer and 42
Treasurer
Brent F. Ashworth Vice President-Legal, Secretary and General Counsel 48
Joseph A. Speirs Vice President-Marketing 44
Dale G. Lee Vice President-U.S. Sales 51
Dr. Alvin B. Segelman Vice President-Health Sciences 65
David K. Shunick Vice President-Operations 59
Certain information regarding the business experience of the officers and
directors is set forth below.
KRISTINE F. HUGHES. Mrs. Hughes is President, Chief Executive Officer,
Chairperson of the Board of Directors and a Director of the Company. Mrs. Hughes
was appointed President and Chief Executive Officer in September 1996. Mrs.
Hughes was a co-founder in 1972 of Hughes Development Corporation, a predecessor
of the Company, and has served as a Director of the Company since 1980. Mrs.
Hughes serves on several civic and community boards and has been recognized for
her business achievements. She is the wife of Eugene L. Hughes.
EUGENE L. HUGHES. Mr. Hughes is Senior Vice President and a Director of the
Company. Mr. Hughes was a co-founder and appointed president in 1972 of Hughes
Development Corporation, a predecessor of the Company. He has served as an
officer or director of the Company and/or its predecessors since 1972. Mr.
Hughes serves on several community boards. He is the husband of Kristine F.
Hughes.
MERRILL GAPPMAYER. Mr. Gappmayer has been a Director of the Company since
1980. He is owner, president and CEO of Vista Enterprises, a commercial,
residential and industrial land development company located in Orem, Utah. Mr.
Gappmayer currently serves as chairman or as a member of the board of six local
and national community service organizations.
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PAULINE T. HUGHES. Mrs. Hughes has been a Director of the Company since
1988. Mrs. Hughes was a co-founder in 1972 of Hughes Development Corporation, a
predecessor of the Company, and has acted as a consultant from time to time to
the Company and its predecessors.
ROBERT H. DAINES. Mr. Daines has been a Director of the Company since June
1996. Mr. Daines has been employed as a Professor of Business Management at
Brigham Young University, Provo, Utah since 1959. Mr. Daines is also currently
engaged as a consultant with the Center for Executive Development in Cambridge,
Massachusetts. He is also a Director of AT&T Universal Financial Corporation and
Franklin Quest Co.
DOUGLAS FAGGIOLI. Mr. Faggioli is Vice President-Finance, Chief Financial
Officer and Treasurer of the Company. He began his employment with the Company
in 1983 and has served as an officer of the Company since 1989. He is a
Certified Public Accountant.
BRENT F. ASHWORTH. Mr. Ashworth is Vice President-Legal, Secretary and
General Counsel for the Company. Mr. Ashworth began his employment with the
Company in 1977 when he was appointed Secretary and General Counsel. He was
appointed Vice President-Legal in 1979 and is a member of the Utah State Bar.
JOSEPH A. SPEIRS. Mr. Speirs is Vice President-Marketing of the Company. He
began his employment with the Company in 1977 and since 1983 has served as an
officer of the Company.
DALE G. LEE. Mr. Lee is Vice President-U.S. Sales of the Company. He began
his employment with the Company in 1978, and has been an officer of the Company
since 1989.
ALVIN B. SEGELMAN, PH.D. Dr. Segelman is Vice President-Health Sciences. He
began his employment with the Company in 1990. From 1971 to 1990, Dr. Segelman
was a professor at the College of Pharmacy, Rutgers University, serving as
Chairman of the Department of Pharmacognosy from 1979 to 1986. Dr. Segelman has
published numerous articles and served on numerous national and Congressional
committees.
DAVID K. SHUNICK. Mr. Shunick is Vice President-Operations. He began his
employment with the Company in 1993. From 1992 to 1993, Mr. Shunick acted as a
management consultant for DKS Associates. From 1989 to 1992 he served as
Director of Material Management for Ares Serono Group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto and
written representations provided to the Company by its officers, directors and
10% shareholders, the Company is unaware of any such persons failing to file on
a timely basis any reports required by Section 16(a) of the Exchange Act during
the most recent fiscal year, except for Robert H. Daines who inadvertently filed
late his Initial Statement of Ownership on Form 3.
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EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information concerning the cash and non-cash
compensation, paid or to be paid by the Company to its chief executive officer
and to each of its executive officers named below, for the three fiscal years
ended December 31, 1996. See also "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS" below for compensation paid to the general managers of the
Company's Mexican and Colombian subsidiaries.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------------------ -------------------------------
(A) (B) (C) (D) (E) (G) (I)
SECURITIES
OTHER ANNUAL UNDER-LYING ALL OTHER
NAME AND PRINCIPAL SALARY COMPENSATION OPTION/SARS COMPENSATION(3)
POSITION YEAR ($)(1) BONUS ($) ($)(2) (SHARES) ($)
- ---------------------- --------- ----------- ----------- ----------------- ------------ -----------------
Kristine F. Hughes, 1996 53,000 43,761
Chief Executive
Officer(4)
Alan D. Kennedy, 1996 309,500 173,000 18,000 9,598
Chief Executive 1995 292,000 243,250 120,000 9,724
Officer 1994 257,953 202,500 19,800 8,933
William E. Spears, 1996 191,359 130,240 12,432 15,300 2,298
Executive Vice 1995 179,500 134,000 40,220 97,500 2,206
President 1994 122,029 83,152 49,500 1,310
Eugene L. Hughes, 1996 155,450 98,700 15,300 7,238
Senior Vice 1995 137,728 100,950 97,500 7,112
President 1994 130,146 83,583 16,500 4,656
Douglas Faggioli, 1996 155,662 99,750 10,800 1,003
Chief Financial 1995 157,500 100,950 97,500 428
Officer 1994 130,138 82,251 16,500 418
Dale G. Lee, 1996 145,200 62,640 11,700 1,629
Vice President-U.S. 1995 130,500 60,621 73,500 1,636
Sales 1994 121,829 58,000 16,500 1,129
- ------------------------
(1) Includes amounts contributed by the Company to its 401(k) defined
contribution plan and amounts paid by the Company under its automobile lease
program.
(2) The Company provides health, disability and other perquisites to each of
its officers, but they do not exceed the lesser of $50,000 or 10% of the
officer's total annual salary and bonus. Amounts listed include relocation
and moving expenses.
(3) Includes excess life insurance premiums.
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(4) Ms. Hughes became Chief Executive Officer of the Company in September
1996, following the resignation of Mr. Kennedy. Ms. Hughes received
compensation of $41,686 and $39,326 for her services as a director of the
Company in 1996 and 1995, respectively.
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements with all seven of its executive
officers who receive base annual salaries currently ranging from approximately
$125,000 to $151,500. The Agreements are renewable on an annual basis and
generally provide for an initial term of one year. In the event the Company
terminates or does not renew an officer's employment without cause, the officer
is generally entitled to receive the balance of his base salary for twelve
months.
EXECUTIVE INCENTIVE PLANS
The Company has from time to time adopted incentive plans for key management
and sales personnel. The only incentive plan in effect for officers of the
Company for 1996 was the Exempt Employee Incentive Compensation Plan ("Bonus
Plan") that provided for the officers to receive specified bonuses ranging from
0% to 90% of base salary if certain sales and operating income goals were
achieved by the Company. Payments totaling $794,605, $1,035,771 and $803,953
were made to officers for services rendered in 1996, 1995 and 1994 for this or
similar executive incentive plans. Amounts paid, if any, to the officers
participating in the Bonus Plan are included in the Summary Compensation Table.
In 1996, the Company adopted a two year incentive automobile lease program
("Lease Program") that provides for the Company to pay lease payments ranging
from $600 to $1,000 per month for the Company's executive officers if the
Company meets or exceeds certain net income performance levels. The Lease
Program also provides that if such performance levels are met in 1996 and 1997,
the Company will pay from $25,000 to $45,000 for each executive officer towards
the buyout of the leased vehicles. Amounts paid, if any, to the officers
participating in the Lease Program are included in the Summary Compensation
Table.
During 1996, the Company granted certain stock options to its executive
officers which were subject to accelerated vesting schedules if the Company met
or exceeded certain net income and sales revenue performance levels. In 1996,
vesting schedules for options to purchase 218,925 shares of the Company's Common
Stock were accelerated because the Company met the specified performance levels.
1995 STOCK OPTION PLAN
The 1995 Stock Option Plan (the "1995 Plan") authorizes the grant of
incentive and non-qualified stock options to officers and key employees. The
1995 Plan covers a maximum of 1,650,000 shares of the Company's Common Stock
(adjusted for stock splits and dividends).
Options issued under the 1995 Plan must have an exercise price at least
equal to the fair market value on the date of grant and a term of not more than
ten years. Options are generally not transferable and are exercisable in
accordance with vesting schedules established by the Compensation Committee (the
"Committee") of the Board of Directors administering the Plan. The Committee
establishes with respect to each option granted to an employee, and sets forth
in the option agreement, the effect of the termination of employment on the
rights and benefits thereunder. In the event of certain changes in control of
the Company, options generally become immediately exercisable.
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As of March 31, 1997 there were 1,351,730 shares subject to non-qualified
options outstanding under the 1995 Plan and 143,370 shares available for further
issuance (as adjusted for stock splits and dividends).
1993 STOCK OPTION PLAN
The 1993 Stock Option Plan (the "1993 Plan") authorized the grant of
incentive and non-qualified stock options to officers and key employees. The
1993 Plan also provided for the automatic annual grant of non-qualified stock
options to purchase 33,000 shares (as adjusted for stock splits and dividends)
to each non-employee director of the Company. The 1993 Plan terminated in
December 1996 and no further options may be granted.
As of March 31, 1997 there were 916,485 shares subject to non-qualified
options outstanding under the 1993 Plan.
1990 LONG-TERM INCENTIVE COMPENSATION PLAN
The 1990 Long-Term Incentive Compensation Plan (the "Incentive Plan")
authorized the grant of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock and performance bonuses or any
combination of the foregoing to key executive and management employees. The
Incentive Plan was terminated by the Board of Directors in March, 1997 and no
further options or other benefits may be issued under the Incentive Plan.
As of March 31, 1997 there were 216,044 shares subject to options
outstanding under the Incentive Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth a summary of certain nonqualified stock
options granted to the Company's named officers during 1996 (as adjusted for
stock splits and dividends).
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ------------------------------------------------------------------------------------------------------- VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM
---------------------
(C)
(B) % OF 312,900 TOTAL OPTIONS (D) (E)
(A) OPTIONS GRANTED TO EMPLOYEES EXERCISE EXPIRATION (F) (G)
NAME GRANTED (#) IN 1996 PRICE ($/SHARE) DATE 5% ($) 10% ($)
- ----------------------------- ------------- --------------------------- --------------- ----------- --------- ----------
Kristine F. Hughes 53,000 17% $ 19.50 12/19/2006 649,780 1,647,240
Alan D. Kennedy 18,000 6% $ 20.00 02/13/2006 226,440 573,660
William E. Spears 15,300 5% $ 20.00 02/13/2006 192,474 487,611
Eugene L. Hughes 15,300 5% $ 20.00 02/13/2006 192,474 487,611
Douglas Faggioli 10,800 3% $ 20.00 02/13/2006 135,864 344,196
Dale G. Lee 11,700 4% $ 20.00 02/13/2006 147,186 372,879
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OPTION EXERCISES DURING 1996 AND 1996 YEAR-END VALUE TABLE
The following table sets forth certain information regarding the exercise
and value of nonqualified stock options held by the named officers during 1996
(as adjusted for stock splits and dividends).
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUE
- -----------------------------------------------------------------------------------------------------------------
(E)
DOLLAR VALUE OF UNEXERCISED
(D) IN-THE-MONEY OPTIONS AT
NUMBER OF UNEXERCISED FISCAL
(B) (C) OPTIONS AT FISCAL YEAR-END
(A) SHARES ACQUIRED VALUE RECEIVED YEAR-END EXERCISABLE/UNEXERCISABLE
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE ($)
- ---------------------- --------------- ----------------- ----------------------- ----------------------------
Kristine F. Hughes 0 0 115,335/53,000 1,007,776/0
Alan D. Kennedy 451,407 8,138,170 77,250/0 277,795/0
William E. Spears 0 0 115,700/36,600 734,017/85,400
Eugene L. Hughes 0 0 218,925/36,600 2,081,577/85,400
Douglas Faggioli 67,870 1,443,671 127,800/36,600 922,150/85,400
Dale G. Lee 21,780 511,384 143,660/22,450 1,244,822/64,050
401(K) PLAN
The Company sponsors a qualified deferred compensation plan ("401(k) Plan")
under Section 401(k) of the Internal Revenue Code, pursuant to which full-time
employees may reduce their salaries by up to 10% of their compensation limited
to a maximum of $9,500 and have the salary reduction amounts contributed to the
401(k) Plan. Such contributions are 100% matched by the Company, up to a maximum
of 5% of the employee's compensation. Participants are fully vested at all times
in their salary reduction and matching contributions. Participants are eligible
to receive distribution of vested amounts upon retirement, death or disability,
or termination of employment. Contributions by the Company to the 401(k) Plan
were approximately $445,000, $478,000 and $284,000 for 1996, 1995 and 1994,
respectively. Amounts contributed for officers participating in the 401(k) Plan
are included in the Summary Compensation Table above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors' Compensation Committee is composed of Merrill
Gappmayer, Pauline T. Hughes and Robert H. Daines.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH
THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.
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REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
As members of the Compensation Committee (the "Committee"), it is our duty
to administer various stock option and incentive compensation plans of the
Company. In addition, the Committee recommends to the Board of Directors the
compensation to be paid to the Company's officers and key employees. The
Committee also reviews compensation policies applicable to officers and
considers the relationship of corporate performance to that compensation.
The Committee submits a report to the Board concerning the compensation
policies followed by the Committee in recommending compensation for the
Company's chief executive and other officers. In establishing such compensation
for 1996, the Committee considered a number of factors, including what it
believed to be the competitive level of compensation that is necessary to
attract, retain and motivate qualified officers. In this regard, the Committee
reviewed several salary reports and surveys. The Committee also considered (i)
an officer's contribution to the Company's operating performance, as measured by
increases in sales revenues, profitability and return on assets, (ii) the
officer's contribution to helping the Company meet its other objectives, such as
providing a high level of service to the Company's customers and in maximizing
shareholder value, and (iii) the Chief Executive Officer's evaluation of each of
the officers. For Alan D. Kennedy, the Company's former Chief Executive Officer,
the Committee also took into consideration the Company's overall stock
performance as measured against the stock market and the performance of the
Company in its overseas markets. Kristine F. Hughes, the Company's current Chief
Executive Officer, agreed to serve as such without additional cash compensation.
For 1996 salaries, the Committee applying the factors set forth above increased
base salaries from 5% to 10% over 1995 levels for a weighted average increase of
approximately 7%. Salaries for 1997, increased approximately 8% over 1996 levels
on a weighted average basis.
The compensation policy of the Company, which is endorsed by the Committee,
is that a substantial portion of the annual compensation of each officer relate
to and be contingent upon the performance of the Company, as well as the
individual contribution of each officer. As a result, much of an officer's
compensation is subject directly to annual bonus compensation measured by the
Company's achievement of certain sales and income goals. Under the Company's
Exempt Employee Incentive Compensation Plan, bonuses are paid based on the
officer's performance and the performance of the entire Company. The Company has
also adopted an automobile lease program where the lease payments are made by
the Company if the Company meets or exceeds certain income goals. The Committee
believes the compensation paid to its officers is reasonable in view of the
Company's performance and the contribution of these officers to that
performance. In this regard, the Committee in 1994 completed a comprehensive
review of the Company's compensation policies and concluded that the Company's
policies worked well.
All officers and key employees participate in the Company's stock option
plans. Options granted thereunder, may provide for the acceleration of vesting
if the Company meets or exceeds certain income and/or revenue goals. The
Committee believes that stock options have been effective in attracting,
motivating and retaining executives and key employees. During 1996, the
Committee recommended stock option grants in the aggregate amount of 312,900
shares (as adjusted for a 3 for 2 stock split) of which shares were subject to
accelerated vesting.
No member of the Committee is a former or current officer or employee of the
Company or any of its subsidiaries.
COMPENSATION COMMITTEE -- Dated April 11, 1997
Merrill Gappmayer Pauline T. Hughes Robert H. Daines
11
CORPORATE STOCK PERFORMANCE
The following graph compares the performance (total return on investment as
measured by the change in the year-end stock price plus reinvested dividends) of
the Common Stock of the Company ("NATR") with that of the Index for NASDAQ Stock
Market (U.S. companies) and the Index for NASDAQ Stock (SIC 2800-2899) for the
five years ended December 31, 1996.
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- ----------- ----------- ----------- ----------- ----------- -----------
100.0 158.7 138.9 155.2 323.4 347.6
100.0 116.4 133.6 130.6 184.7 227.1
100.0 86.3 77.2 60.7 102.7 104.0
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Maria del Carmen Cisneros, the general manager of the Company's Mexican
subsidiary, received a total of $652,505 of compensation from the Company in
1996. Of that amount, $85,076 was salary and bonus and the balance was for
commissions received as an independent distributor of the Company's products.
Ms. Cisneros also borrowed $250,000 from the Company in 1995, pursuant to a
two-year secured 9% promissory note. The note was repaid in August 1996.
Maria Teresa Polo de Abello, the general manager of the Company's Colombian
subsidiary, received a total of $313,188 of compensation from the Company in
1996. Of that amount, $137,028 was salary and bonus and the balance was for
commissions received as an independent distributor of the Company's products.
In 1992, the Company adopted a key officer loan program to assist certain of
its officers in purchasing Common Stock of the Company. The loans are due 90
days after demand or termination of employment. The loans are secured by the
Common Stock purchased and bear interest at 6% per annum.
From time to time, the Company has made personal loans to assist certain of
its officers and key employees. Loans made to officers are secured by Common
Stock of the Company, and are due 90 days after demand. Outstanding loans bear
interest at 6% per annum.
The following table provides certain information about each director or
officer who was indebted to the Company since January 1, 1996, in an amount in
excess of $60,000. Included in the table is the name of each such director or
officer, the amount and nature of the indebtedness and of the transaction in
which it was incurred, the largest aggregate amount of indebtedness outstanding
by each such person since January 1, 1996 and the amount thereof outstanding as
of March 31, 1997. For the nature of each such person's relationship to the
Company see "ELECTION OF DIRECTORS -- Officers and Directors" above.
AGGREGATE
LARGEST BALANCE
AGGREGATE AT
NAME NATURE OF INDEBTENESS AMOUNT 3/31/97
- ---------------------------- ------------------------ ---------- ---------------
Alan D. Kennedy Stock Purchase Loan $ 144,024 0
Personal Loan 100,230 0
Joseph A. Speirs Stock Purchase Loan $ 60,743 0
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of the Company has recommended
to the Board of Directors that Arthur Andersen & Co. be selected again as the
independent public accountants for the Company. The Board of Directors has
accepted this recommendation and has selected Arthur Andersen & Co. to be the
independent public accountants for the Company for the fiscal year ending
December 31, 1997. Arthur Andersen & Co. served as the Company's independent
public accountants for the fiscal year ended December 31, 1996.
Representatives of Arthur Andersen & Co. are expected to attend the 1997
Annual Meeting and will have an opportunity to make a statement if they desire
to do so, and they will be available to answer appropriate questions from
shareholders.
13
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal at the 1998 Annual Meeting of
Shareholders, the proposal must be received by Nature's Sunshine Products, Inc.,
75 East 1700 South, Provo, Utah 84606 prior to December 31, 1997. The Board of
Directors will review any proposal which is received by that date and determine
whether it is a proper proposal to present to the 1998 Annual Meeting.
VOTE REQUIRED
A majority of the 18,795,887 issued and outstanding shares of Common Stock
of the Company shall constitute a quorum at the Annual Meeting. Under the Utah
Revised Business Corporation Act, directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election at the Annual Meeting
provided a quorum is present. The affirmative vote of at least a majority of the
shares represented at the meeting is required for all other proposals to come
before the meeting. The Company does not have any specific charter or by-law
provisions dealing with the method by which votes will be counted; however, in
prior years the Company has counted abstentions and broker non-votes for quorum
purposes but the votes represented by such shares are not counted in computing
the results of the election of directors or other resolutions.
Votes cast by shareholders who attend and vote in person or by proxy at the
Annual Meeting will be counted by inspectors to be appointed by the Company (it
is anticipated that the inspectors will be employees, attorneys or agents of the
Company).
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not intend to present and has not been informed that any other
person intends to present a matter for action at the 1997 Annual Meeting other
than as set forth herein and in the Notice of Annual Meeting. If any other
matter properly comes before the meeting, it is intended that the holders of
Proxies will act in accordance with their best judgment. The Board of Directors
may read the minutes of the 1996 Annual Meeting of Shareholders and make
reports, but shareholders will not be requested to approve or disapprove such
minutes or reports.
In addition to the solicitation of Proxies by mail, certain of the officers
and employees of the Company, without extra compensation, may solicit Proxies
personally or by telephone. The Company will also request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting materials to the
beneficial owners of Common Stock held of record and will reimburse such persons
for forwarding such material. The cost of this solicitation of Proxies will be
borne by the Company.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES) FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO THE COMPANY --
ATTENTION: INVESTOR RELATIONS DEPARTMENT, 75 EAST 1700 SOUTH, PROVO, UTAH 84606.
Copies of the Company's 1996 Annual Report to Shareholders are being mailed with
this Proxy Statement. Additional copies may also be obtained by writing to the
Company's Investor Relations Department, at the above address.
The enclosed Proxy is furnished for you to specify your choices with respect
to the matters referred to in the accompanying notice and described in this
Proxy Statement. If you wish to vote in accordance with
14
the Board's recommendations, merely sign, date and return the Proxy in the
enclosed envelope which requires no postage if mailed in the United States. A
prompt return of your Proxy will be appreciated.
By Order of the Board of Directors
BRENT F. ASHWORTH
SECRETARY
Dated: April 14, 1997
15
PROXY
NATURE'S SUNSHINE PRODUCTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kristine F. Hughes and Brent F. Ashworth and
each of them as Proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as designated on the reverse, all
shares of Common Stock of the Company held of record by the undersigned on
April 14, 1997, at the Annual Meeting of Shareholders to be held at the
Company's corporate offices at 75 East 1700 South, Provo, Utah 84606, on
Monday, May 19, 1997, at 10:00 a.m., local time, or at any adjournment
thereof.
(TO BE SIGNED ON REVERSE SIDE.)
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD Nominees: Merrill Gappmayer
Pauline T. Hughes
1. Election of / / / /
Directors
2. In their discretion, the Proxies are / / / / / /
authorized to vote upon such other
business as may properly come
before the Annual Meeting.
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee, write that nominee's name on the
space provided below.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign and date this Proxy where shown
below and return it promptly:
No postage is required if this Proxy is
returned in the enclosed envelope and
mailed in the United States.
SIGNATURE(S)_____________________________________________DATE_____________
Note: Please sign above exactly as the shares are issued. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.)